Question: The demand curve for labor facing a monopsonist is given

The demand curve for labor facing a monopsonist is given as W = 35 - 6L; the supply curve (AFC) for this monopsonist is W = 3 + L, with corresponding MFC = 3 + 2L, where W represents the hourly wage rate and L is the number of person- hours hired.
a. Find the optimal quantity of labor and wage rate for this profit- maximizing monopsonist.
b. Suppose a minimum wage law imposed a $17/ hr minimum wage. How would this affect the quantity of labor demanded by this firm?


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  • CreatedDecember 12, 2014
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